All financial figures are in Canadian dollars unless noted otherwise
CALGARY, Oct. 17, 2011 /CNW/ - Gibson Energy Inc. ("Gibson"), TSX: GEI, and Palko Environmental Ltd. ("Palko"), TSX: PLK,
are pleased to announce that they have entered into an agreement
providing for the acquisition by Gibson of all of the issued and
outstanding common shares of Palko ("Palko Shares") not already owned,
directly or indirectly, by Gibson (the "Transaction"). Under the terms
of the Transaction, shareholders of Palko may elect to receive either:
(i) 0.1717 of a common share of Gibson ("Gibson Share") for each Palko
Share; or (ii) $3.05 cash for each Palko Share; or (iii) a combination
thereof. The total cost to Gibson is approximately $62.7 million,
including the assumption of estimated net debt of approximately $15.95
million. When combined with Gibson's investments in Palko to date
pursuant to which Gibson has acquired approximately 39% of the
outstanding Palko Shares, Gibson is paying an effective price of
approximately $2.26 per Palko Share in order to acquire 100% of Palko.
The Transaction will expand Gibson's Canadian custom terminal operations
to include water disposal services and oilfield waste management. "The
acquisition of the remaining interest of Palko is a key step in forming
this platform to meet the ever increasing water disposal services and
oilfield waste management needs of the oil and gas industry in North
America" said Stew Hanlon, President and Chief Executive Officer of
Gibson. "Palko represents a strategic acquisition for Gibson. Combined
with our recent investment in the Plato Pipeline, Treating and Disposal
facility ("Plato") and development plans for our Rimbey Custom Terminal
("Rimbey"), it creates a service offering in western Canada that will
make Gibson a significant player in this space." The combined
platform, including Palko (100% interest), Plato and Rimbey, represents
an investment by Gibson of $82 million for a total estimated EBITDA
contribution of $16 million per year when fully operational. A
detailed description and location map of these assets are in the
Appendix of this press release. "This expansion of Gibson's custom
terminal service offering across western Canada will create additional
benefits in our trucking and marketing businesses due to the integrated
nature of our business model." said Mr. Hanlon.
Jay Simmons, Chairman and CEO of Palko commented: "This transaction
recognizes the tremendous underlying value that has been created by the
exceptional team we have assembled at Palko and provides shareholders
with an attractive premium to recent trading values. We have grown to
know Gibson well over the past few years: they are a world class
organization that has been a wonderful partner in Palko's success. We
are delighted to see the Palko team be provided the opportunity to
accelerate its growth with Gibson."
The Transaction is to be completed through an arrangement pursuant to
the Business Corporations Act (Alberta) and is expected to be completed by the middle of December
2011. Completion of the Transaction is subject to approval by Palko
shareholders, court approval and regulatory approvals. The Board of Directors of Palko has unanimously determined, with the
nominees of Gibson abstaining, to recommend that Palko shareholders vote their Palko Shares in favour of the Transaction.
Certain shareholders of Palko, collectively holding or controlling
approximately 42.9% of the Palko Shares (81.8% of the Palko Shares when combined with the Palko Shares
already owned by Gibson), have entered into agreements with Gibson
whereby they have irrevocably agreed to vote their Palko Shares in
favour of the Transaction.
The terms of the Transaction prohibit Palko from soliciting or
initiating any discussion regarding any other business combination or
sale of material assets, includes provisions for Gibson to match
competing, unsolicited proposals and, subject to certain conditions,
provides for a $3.0 million break fee payable by Palko to Gibson.
FirstEnergy Capital Corp. is acting as financial advisor to Palko with
respect to the Transaction and has advised the Board of Directors of
Palko that it is of the opinion, as of the date hereof and subject to
review of the final documentation, that the consideration to be
received by the Palko shareholders pursuant to the Transaction is fair,
from a financial point of view, to the Palko shareholders (other than
Gibson and its affiliates).
Scotia Capital Inc. is acting as financial advisor to Gibson with
respect to the Transaction.
Gibson is one of the largest independent midstream energy companies in
Canada and a major participant in the crude oil transportation business
in the United States, and is engaged in the movement, storage,
blending, processing, marketing and distribution of crude oil,
condensate, natural gas liquids, and refined products. Gibson
transports hydrocarbons by utilizing its integrated network of
terminals, pipelines and truck fleet, located throughout western Canada
and the United States.
Gibson's shares trade on the Toronto Stock Exchange under the symbol
Gibson's primary objective is to generate stable and growing cash flows
for shareholders through an attractive dividend and a growing asset
Palko provides processing and disposal of oilfield and industrial wastes
through its network of waste handling and hydrocarbon recovery
facilities located across Alberta and Saskatchewan. Palko's focus on
client service extends to custom oil treating, waste oil reclamation
and crude oil market access for customers.
Palko services support all aspects and stages of oil and gas exploration
and production, including drilling, fracturing, completion, production
and subsequent abandonment and reclamation. In addition, Palko provides
hydrocarbon recovery and waste management solutions for a variety of
non-oilfield and industrial wastes of similar composition.
Certain statements contained in this news release constitute
forward-looking statements. These statements relate to future events or
Gibson's and Palko's future performance. All statements other than
statements of historical fact are forward-looking statements. The use
of any of the words ''anticipate'', ''plan'', ''contemplate'',
''continue'', ''estimate'', ''expect'', ''intend'', ''propose'',
''might'', ''may'', ''will'', ''shall'', ''project'', ''should'',
''could'', ''would'', ''believe'', ''predict'', ''forecast'',
''pursue'', ''potential'' and ''capable'' and similar expressions are
intended to identify forward-looking statements. These statements
involve known and unknown risks, uncertainties and other factors that
may cause actual results or events to differ materially from those
anticipated in such forward-looking statements. Although Gibson and
Palko believe these statements to be reasonable, no assurance can be
given that these expectations will prove to be correct and such
forward-looking statements included in this news release should not be
unduly relied upon. Such statements include the closing of the
Transaction, the acceleration of Palko's growth and the creation of
additional benefits in Gibson's trucking and marketing business. Gibson's and Palko's actual results could differ materially from those
anticipated in these forward-looking statements as a result of the Transaction not closing when planned or at all; the failure of
Gibson and Palko to obtain the necessary regulatory, shareholder and
other third party approvals required in order to proceed with the
Transaction; regulatory decisions, competitive factors in the industries in which
Gibson and Palko operate, prevailing economic conditions, and other
factors, many of which are beyond the control of Gibson and Palko. The
forward-looking statements contained in this news release represent
Gibson's and Palko's expectations as of the date hereof, and are
subject to change after such date. Gibson and Palko disclaim any
intention or obligation to update or revise any forward-looking
statements whether as a result of new information, future events or
otherwise, except as may be required by applicable securities
Palko Environmental Ltd.
Palko has approximately 80 employees and operates 6 waste management and
custom treatment facilities within Alberta and Saskatchewan, plus 2 new
facilities currently under construction in Saskatchewan. Facilities
treat, recover and dispose of water, oils and solids found in oil and
gas field wastes, including produced water and completion water,
workover fluids, frac fluids, drilling fluids, drilling muds and wastes
from spills. Facility locations:
Grande Cache, AB;
Midale, SK (2 facilities); and
Two new facilities under construction at Oungre, SK and Stoughton, SK
are expected to be operational in Q4 2011.
Experienced operational and business development employees who will
bring to Gibson additional knowledge and expertise in the water
disposal and oilfield waste management sector.
Facilities are located in key producing regions of Alberta and
Saskatchewan and are a good fit with Gibson assets with very little
Palko currently has a master services agreement with Gibson trucking
business to haul all clean crude out of the Palko facilities and a
contract under which Gibson performs crude marketing services on behalf
Plato Pipeline, Treating and Disposal Facility
The Plato Pipeline represents approximately 45 miles of 4" pipeline that
runs southeast from the IPF Mid-Saskatchewan Pipeline System to the
Plato oil pool.
In August 2011, Gibson purchased a 50% interest in the Plato Pipeline
from Midroy Energy and agreed to jointly own/construct an oil treating
and water disposal facility near Plato, Saskatchewan.
The Saskatchewan Viking area is an industry growth area that is lacking
in mid-stream infrastructure.
The majority of the emulsion volumes received at the treating facility
will arrive by truck; therefore, Gibson trucks will have the
opportunity to transport these volumes.
Gibson will own 50% and operate the treating and disposal facilities and
The project includes:
Construction of a 3,000 bbl/day treating facility with expansion
capability to 5,000 bpd, associated truck receipt and tankage;
A water disposal well and water injection pipeline; and
Connection to the IPF Mid-Saskatchewan pipeline at Dodsland.
Total capital investment of approximately $4.5 million.
Facility construction will begin shortly and is expected to be
operational in Q1-2012.
Rimbey Custom Terminal Expansion
Gibson's existing Rimbey Custom Terminal is located in a very active
area for Cardium reservoir development. There is a shortage of
emulsion treating capacity in the general Rimbey area thus creating an
opportunity to add an emulsion treating facility together with a
connection to the adjacent Pembina Bonnie Glen Pipeline. In the Grand
Prairie area, the Duvernay shale zone is primarily liquids rich gas,
but closer to Rimbey it is more oil prone. The Duvernay shale zone is
just beginning to be developed in the Rimbey area. An emulsion
treating facility at Rimbey will attract Duvernay emulsion volumes as
this zone gets evaluated.
The project includes:
Construction of a 3,000 bbl/day treating facility with expansion
capability to 5,000 bpd; and
Associated truck receipt, tankage and butane blending facilities.
Total capital investment of approximately $4.4 million.
Regulatory work is under way; therefore, proceeding with construction is
subject to regulatory approval. The facility is expected to be
operational by Q2-2012.
Image with caption: "Location Map (CNW Group/Gibson Energy Inc.)". Image available at: http://photos.newswire.ca/images/download/20111018_C4951_PHOTO_EN_4989.jpg
Image with caption: "Gibson Energy Inc. enters into an Arrangement Agreement to Acquire Palko Environmental Ltd. (CNW Group/Gibson Energy Inc.)". Image available at: http://photos.newswire.ca/images/download/20111018_C4951_PHOTO_EN_4993.jpg
Gibson Energy Inc. enters into an Arrangement Agreement to Acquire Palko Environmental Ltd. (CNW Group/Gibson Energy Inc.)